Chippy Posted March 4, 2021 Posted March 4, 2021 In 2019 a participant in a profit sharing plan received the full contribution when they should of received the 3% top heavy minimum due to working less than 1,000 hours. To correct, can it be taken back out of their account (brokerage account) or if the employer wants them to keep it, can the plan be amended to allow? Just wondering the best way to fix. thank you
BG5150 Posted March 4, 2021 Posted March 4, 2021 It is too late to do that now. Any 11(g) amendment must be done by October 15 the following year (for a calendar yr plan). In this case 10/15/2020. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
BG5150 Posted March 4, 2021 Posted March 4, 2021 34 minutes ago, Bri said: How about making it part of his 2020 allocation then? Only if they worked 1,000 hours in 2020 or they do an 11(g) amendment for this person. And provided they aren't an HCE. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
Chippy Posted March 4, 2021 Author Posted March 4, 2021 unfortunately they didn't work over 1,000 hours again in 2020. That's how I realized the error in 2019. Not an HCE but sounds like it's too late to do anything other than take the money out of their account for 2019
Bill Presson Posted March 4, 2021 Posted March 4, 2021 2 minutes ago, Chippy said: unfortunately they didn't work over 1,000 hours again in 2020. That's how I realized the error in 2019. Not an HCE but sounds like it's too late to do anything other than take the money out of their account for 2019 But you could do an -11g for 2020. William C. Presson, ERPA, QPA, QKA bill.presson@gmail.com C 205.994.4070
BG5150 Posted March 4, 2021 Posted March 4, 2021 I agree that it can be used for 2020. But tell them to be careful of the deduction and the deposit. Bill Presson 1 QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
Chippy Posted March 4, 2021 Author Posted March 4, 2021 BG5150, they could use it towards the 2020 contribution deposit?
BG5150 Posted March 4, 2021 Posted March 4, 2021 5 minutes ago, Chippy said: BG5150, they could use it towards the 2020 contribution deposit? Towards it, yes. But remember it's already in the plan. So if the participant's mistaken allocation was $1,000 and the total 2019 PS was $100,000, the sponsor probably deducted all $100,000. Say the total PS is again $100,000. They need to remember to only remit $99,000 and to deduct only $99.000 for 2020. Too often clients will just send in the number that's on the bottom of contribution report page. And don't forget that amendment! QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
Chippy Posted March 4, 2021 Author Posted March 4, 2021 I just need the amendment if they want to give her the full contribution for 2020? Is that correct? and what if her excess in 2019 is more than her 2020 contribuition? can I carry it for another year? is that correct? I really hate this time of year. ugh
BG5150 Posted March 4, 2021 Posted March 4, 2021 You would not be able to carry a 2020 deposit over for a 2021 contribution. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
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